Financial literacy? Not all Iowa students in a hurry to learn money skills

First year of online financial literacy course yields mixed success

The Iowa Board of Regents routinely has been increasing tuition at the state’s three public universities as the Iowa Legislature has been appropriating a lessening share of revenue to meet the cost of higher education. University of Iowa President Bruce Harreld. above, on Aug. 14, 2017, addresses a regents tuition task force on the university’s five-year tuition plan. (Jim Slosiarek/The Gazette)

By Marissa Payne, The Gazette

Iowa’s public universities are seeing varying degrees of success with using an online financial literacy training service for its incoming students to better educate them on managing their money and minimizing student loan debt.

The universities governed by the Iowa Board of Regents launched a financial literacy initiative in 2017 after the board called upon the institutions to do just that — the main goal being to help students reduce the loads of debt they take on to finance a degree.

Initially, the board tasked university officials with offering a mandatory, classroom-based, credit-bearing course. But administrators said that such a course would be costly and consume too much time and space to effectively implement.

The University of Iowa, Iowa State University and the University of Northern Iowa in the 2017-18 academic year instead debuted the online CashCourse, a training developed by the National Endowment for Financial Education that covers budgeting and money management, spending and financial decision making, credit and debt and financial aid and student loans.

“These are educational materials to teach people throughout the life cycle spectrum about various areas of financial literacy,” said Roberta Johnson, ISU’s financial aid director.

This comes after the board consistently has voted to increase tuition for students attending Iowa’s public universities in the face of dwindling state support. In June, the board approved tuition increases for resident undergraduates of 3.8 percent at the UI and ISU and 2.8 percent at UNI, with varying rates for non-residents and graduate students.

A financial aid report delivered to the board in April showed the percentage of students borrowing generally has trended down in recent years among regent university students, though there was a slight increase among resident students at ISU and UNI in 2016-17.

“The universities have kept the board informed on the progress of their implementation of the financial literacy initiative,” board spokesman Josh Lehman told The Gazette in an email. “It is an important element in the board’s goal of providing an affordable education for our students. The universities are continuing to evaluate and improve the financial literacy training.”

Of the three universities, the UI saw the highest completion rate at 99 percent, according to Kelsey Ryder, a financial literacy specialist at the UI.

There, the course was implemented as a module in the institution’s Success at Iowa course, which already had been required for incoming first-year students.

Ryder said about half of students improved their scores between a pre- and post-test in the course, while 25 percent scored worse. However, of the roughly 6,000 students who went through the course, Ryder said 58 percent reported the course was useful and also reported increased confidence in managing their money.

“In general, I think it was a good way to show students that financial literacy is important here at Iowa,” Ryder said. She noted there are plans to examine the quiz questions and modules and potentially make improvements by the 2019-20 academic year.

New students who have not completed the course are supposed to do so before graduation.

UNI similarly already had an existing in-person financial literacy course, Live Like a Student, before rolling out the board’s initiative and incorporating CashCourse. Students can opt to take either course.

Tim Bakula, UNI’s interim director of financial aid, said 81.2 percent of 1,848 eligible incoming freshmen completed one of the two courses. Most chose to complete CashCourse, but 323 students took Live Like a Student.

He said UNI plans to collaborate closely with other freshman experience courses to see those completion rates increase closer to 100 percent.

While Bakula was unsure the financial literacy education will have a significant effect on borrowing simply because of the economics of what a college education costs, he said getting students to borrow less was always a “hopeful byproduct” of offering such training.

“They see that price tag that they have to pay and unless they have money saved up or scholarships or parental support, they’re probably still having to borrow the full federal loan,” he said.

On the lowest end of the completion rate spectrum is ISU at 42 percent, according to Jennifer Schroeder, program coordinator at the Student Loan Education Office.

ISU’s program was offered in the spring, but will now be offered to students as they come in during the fall semester, Schroeder said.

Additionally, instead of enrolling all new incoming students, including transfer and non-traditional students, she said only new first-years will take CashCourse, which is anticipated to drop enrollment by about 2,000.

A criticism of the financial literacy initiative has been that it places more of the burden on students to manage their loan debt instead of providing incentive to the board to keep costs down so students have less debt to manage.

However, Bakula said, the financial literacy initiative is a stopgap way to ensure students are educated about their finances as the state picks up a lessening share of higher education costs.

“It’s our way to help educate students,” he said. “If we did have more aid to offer, I would love to have the opportunity.”

By Marissa Payne, The Gazette

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